Send Lawyers, Guns (and Butter), and Money

Posted: August 30, 2010 in Uncategorized
Tags: , , ,

The Economist article Defence Spending In A Time of Austerity captures a number of profound truths.

First, when it comes to guns or butter, most governments will choose butter, assuming it’s an either/or issue.  Of course, borrowing the money to buy both guns and butter is an option that’s pursued when the issue evades either/or status.  If the leaders of the Soviet Union had thought to issue debt instruments, they’d probably still have a USSR today.

Next, military spending, whether in the U.S. or Europe, tends to suffer from a number of process problems which cause per unit costs to rise.  Process problems are legion but can largely be reduced to two major issues: optimistic sellers and buyers and the absence of economies of scale.  As initial optimism turns towards reality, cost, schedule, and performance goals are not met.  Given more money, the threats of missing these aspects of these goals can be mitigated.  However, this means per unit costs rise and over time, new weapons systems price themselves out of the budget in the quantities they were originally envisioned.

Third, the lessons of the Cold War, where the West won without a World War III, were profound.  Having the best weapons in the inventory (or under development) became a top priority versus the need to have ‘good enough’ weapons in sufficient quantities of earlier wars.  As such, the question of whether future wars are more likely to resemble the Cold War or more recent conflict is significant.

So at the end of the day, when your borrowing is tapped out and the demands for guns and butter remains, what yields?  Do nations scale back their ambitions?  Are game-changing technologies pursued (ICBM, SLBM, space, unmanned vehicles)?  Do nations wring the ‘overhead’ and inefficiencies out of their militaries?  Does the challenge get ignored or the can kicked?

The programmer’s law—if it ain’t funded, it ain’t—never fails.  So if defense (or elements therein) ain’t’ funded, it ain’t.  When that happens, the programs that do receive funding had better be the ones the nation needs the most.

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